Navigating the Language of Debt Recovery in the UK: A Comprehensive Glossary

Understanding the terminology used in debt recovery in the UK is essential for businesses and individuals navigating this complex field. This comprehensive glossary, drawing insights from Debt-Claims and Advocate’s Debt Recovery Glossary, demystifies key terms and concepts.

Key Terms in Debt Recovery

  1. Acid Test Ratio: A financial metric used to evaluate a company’s ability to meet its short-term obligations. In debt recovery, this ratio can help in formulating repayment plans​​.

  2. Agent: A person authorised to act on behalf of another, legally binding the principal by their actions. This is important in debt collection where agents may be used to recover debts​​.

  3. Annual Return: A summary of a company’s financial activity over a year, submitted to Companies House. This document is crucial for collectors in assessing a company’s financial health​​.

  4. Bankruptcy: Where a person cannot pay debts owed and is declared bankrupt by the Court. This process can be voluntary or done at the request of a creditor and the debtors assets will be sold by the Reciever to repay creditors​​.

  5. Bill of Exchange: A written order used mainly in international trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date.  ​​.

  6. County Court Judgment (CCJ): A judgment from a County Court that confirms a debt is owed. It is a critical step in formal debt recovery​​.

  7. Charging Order: A court order that attaches a debt to an asset owned by the debtor, for example, a property or funds, potentially leading to the sale of the asset if the debt is not paid​​.

  8. Consumer Credit Act (CCA): Legislation governing the agreements for personal loans, credit cards, and other forms of personal credit​​.

  9. Debenture: A document that records a debt and the repayment process agreed upon by the debtor and creditor.​​.

  10. Enforcement: Actions taken following a successful debt recovery claim if the judgment is not satisfied. This includes methods like bailiff intervention and attachment of earnings​​.

  11. Insolvency: Where a business is unable to pay debts owed, often leading to formal insolvency proceedings like liquidation or administration​​.

  12. Liquidation: The process of winding up a company’s affairs and distributing its assets to creditors.​​.

  13. Official Receiver: An Insolvency Service officer appointed by the Court is accountable to the Secretary of State for Business, Innovation, and Skills as well as the Court to administer compulsory (via a winding up petition) company liquidations ​​.

  14. Retention of Title Clause: A clause in a contract that prevents ownership of goods from transferring to the buyer until the goods have been paid for in full​​.

  15. Secured Creditor: A creditor who holds a security interest in an asset of the debtor (for example a mortgage lender holds a security over the mortgaged property), which provides additional security in case of the debtor’s default​​.

  16. Statutory Interest: Interest that can be charged on late commercial payments, calculated according to a statutory formula​​.

  17. Winding up Order: A court order that forces a company to stop trading and liquidate its assets​​.

This glossary is an essential tool for anyone involved in the debt recovery process in the UK. Understanding these terms facilitates better communication and decision-making in what can often be a complex and challenging field.

To find out more about how Debt-Claims can assist your business, contact us today or call us on 02475 185 608.

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